According to the 5/25 rule, the ratio of New York City jobs in the securities industry and the income they account for is 5 to 25: approximately 5 percent of NYC jobs come from the securities industry and they account for about 1/4 of personal income. With such a large, and disproportionate market share of NYC income, Wall Street has long been considered a lynchpin of the NYC real estate economy and perhaps most strongly aligned with Manhattan.

Still, it is a stretch to associate the ebb and flow as a predictor of future gains and losses in Manhattan housing prices, especially when considering deferred compensation. (Also, many Wall Streeters are getting paid from income deferred from a few years ago when times weren’t as good.) But it’s fun to chart. Especially after last week’s announcement by the State Comptroller of a 15.1 percent increase in both the Wall Street bonus pool and on a per person basis…

The annual release by the New York State Office of Comptroller brought upbeat news to the real estate economy in NYC. Wall Street compensation has long accounted for roughly a quarter of personal income but only 5% of employment so the industry remains very important to NYC’s tax revenues. Here are some of the key points:

Part of the rise was due to payouts of deferred compensation from prior years.

Here are a few charts that layout the bonus trends in NYC. Wall Street is a key economic driver of NYC and therefore important to the health of the NYC housing market.

Wall Street compensation is 5x that of mere mortals (other private employment compensation) and that ratio has stabilized after a modest correction following the 2008 stock market crash.
[click to expand]

Wall Street bonuses rose steadily as a portion of total compensation but after the 2008 stock market correction and financial reform, the market share fell – but not as much as perceived.
[click to expand]

Wall Street employment has fallen since 2008, but not nearly as much as expected. The market share of Wall Street NYC employment has slipped as a result.
[click to expand]

Comments Off

Follow Jonathan

Newsletter Signup:

If you haven't already, sign up for
'Housing Notes' to receive weekly insights and research.

First Name

Last Name

Email Address

About Jonathan Miller

Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser “A” Member of the Real Estate Board of New York and a member of Relocation Appraisers and Consultants, Inc.Learn More...

Subscription Service Coming Soon

You'll be able to choose from an array of robust housing metrics compiled using research developed during the preparation of our market report series. Expanded significantly from prior offerings, use this resource to build charts and custom data tables or leverage your own information for more powerful research and presentations.

In the meantime, here is a small sample of the aggregated data we will provide.

“Our sherpa in the land of broker euphemism for the current state of the housing market.”–New York Observer

“His market reports are to the Manhattan housing market what those brackets are to the NCAA Tournament.”–New York Observer

Matrix Blog

Source: WSJ Yesterday evening Josh Barbanel at WSJ posted a milestone piece on the current building boom: Construction in New York City Goes Through The Roof: New residential permits surge as developers rush to qualify for tax break There has… Read More